Nigeria’s telling indexes

November 2, 2012 : ’Tunji Ajibade (tunjioa@yahoo.com)

’Tunji Ajibade

It might as well be. But this index is not from Transparency International. The figures are similar though, and they are familiar, to Nigerians, that is. 131st. It was what Nigeria ranked lately in a survey about the ease of doing business. International Finance Corporation, the private sector arm of the World Bank conducted it. The list had 185 countries, and it was for 2013. The nation had ranked the same for 2012. So this, really, is no news. And it is no news that the nation always ranks that low in most other indexes, including TI’s, Extractive Industries Transparency International’s index on corruption in the extractive industry such as oil and gas, as well as in the CIA World Factbook’s poverty index, in which the nation is among the last six – because 70 per cent of its people live below poverty line. This is to name but a few.

What was it that the World Bank had in mind with its Doing Business survey that is in its 10th year? And what’s its relevance for Nigeria when placed side by side with the nation’s poverty index? The surveyed countries included: 46 economies in sub-Saharan Africa; 33 in Latin America and the Caribbean; 24 in East Asia and the Pacific; 24 in Eastern Europe and Central Asia; 19 in the Middle East and North Africa and eight in South Asia, as well as 31 OECD high income economies. The survey is meant to show how easy it is for a local entrepreneur to start and run a small to medium-sized business when complying with relevant regulations. Local entrepreneurs. Not foreigners. That means there’s something important about local entrepreneurship that the World Bank knows. That sector suffers in Nigeria, while our leaders gloat over how much foreign direct investment flows in. Take note of what many of the foreign investors do though. Some generate amazing revenue from mobile Telecoms and repatriate funds to their home country. A major milk company imports powdered milk from New Zealand, using scarce foreign exchange, but packages in Nigeria. Meanwhile, the same cattle can be raised here. The nation has a cotton belt, but imports textiles from China. The largest producer of cassava imports cassava starch from Europe, one with tomato belt in Jigawa and Chad Basin is the largest importer of tomato paste from China and Italy. One with potential to produce rice imports same from Thailand and India.

It’s not always that indexes come from outside. In February, 2012, our own National Bureau of Statistics said despite strong growth in Nigeria, the level of absolute poverty rose to 60.9 per cent of the population in 2010 from 54.7 per cent in 2004. It has worsened in 2012 with the CIA World Factbook putting it at 70 per cent. This raises a question: Why does the economy grow and Nigerians are poorer? Some talk of paradox. No point searching for what’s not lost. What soaks up the accruable gains from economic growth is obvious. Gains are not distributed across board. That answer is for the end part of the matter. What of the beginning? Personal income is lopsided; favours those in the oil industry, real estate, civil servants, Telecoms, stock market and the politicians who are deep in corruption. That one, too, is another answer, not the main answer that’s in the reason why Nigeria is low on the Doing Business index.

The World Bank has said, “Doing Business is about smart business regulations, not necessarily fewer regulations.” Now, the following is interesting: Leaders here beat their chests and say some agencies have been removed from seaports, so clearance for goods now takes 48 hours. Players know however, where the shoe pinches as government officials are devising other means of taking what government says can no longer be taken at the seaports. But then, does the government want to have fewer regulations that can be sabotaged on the altar of corruption, or have smart business regulations?

The World Bank also said its survey specifically measures and tracks changes in regulations affecting 11 areas in the life cycle of a business. So, for Starting a business, Nigeria ranked 119 (out of 185); dealing with construction permits, 88; getting electricity, 178; registering property, 182; getting credit, 23; protecting investor, 70; paying taxes, 155; trading across borders, 154; enforcing contracts, 98; and resolving insolvency, 105. Of the 50 economies making the most improvement in business regulation for domestic firms since 2005, 17 are in sub-Saharan Africa. Players know what the issues are in each of these areas, so it’s no wonder that Mauritius, South Africa and Ghana came ahead of Nigeria’s 131st, at 19th, 39th and 64th, respectively. Rwanda, Botswana, Namibia and Zambia are 52nd, 59th, 87th and 94th, respectively.

Every fact book says Nigeria, at seven per cent rate, is one of the fastest growing economies in the world. No one needs to search for the missing link in an economy that grows with a few and countable number of foreign investors, and the millions of local entrepreneurs that are either closing shops daily or are stagnated. Many of the latter are owed so much debts by the government. Lawmakers took a look at the proposed 2013 budget and said without paying up the debts, local entrepreneurs cannot grow businesses, and generate more employment opportunities. But can anyone figure out the link between an economy that grows, while unemployment rate is high, more people fall below poverty index, and the nation rates low in the Doing Business index for domestic entrepreneurs? Corruption. It’s a major reason foreign investments flow in, yet domestic businesses don’t take root and sprout, unemployment rate is high, and poverty prevails.

Foreign businesses have a budget for bribery, corrupting a system that looks up to them for financial gratifications. Many of such companies have been reprimanded for this by their home governments in recent times. So what happens when local entrepreneurs fail to pay up? When, for instance, a major domestic airline was shut down by the aviation authorities lately, its management alleged it was because someone was not settled among aviation officials. Consistently, the few foreign and local entrepreneurs that have carrots to throw around have their ways at each stage of doing business, and, in the process, doors of opportunities are shut to others.

All of these ensure that funds move only in the hands of a few. People living below poverty line cannot rise, because the business environment is not conducive for a larger percentage of the population to climb the ladder. It’s shocking how much is overlooked here when financial impropriety is at issue. The federal executive and the legislature have turned issues of prosecuting corrupt officials into a battleground for testing political will and wit. People who admit giving and taking bribes dine in the executive chambers, and they sit in the legislature. Now with such footages playing out at the highest level, what should other government officials do when it comes to doing business? Until the current administration shows the will to name names, shame those that corrupt the system, and encourage local entrepreneurship more, no one will wave bye to the nation’s depressing indexes.

Columnists

"Mr Orubebe, you are former minister of the Federal Republic, you are a statesman in your own right and you must be careful about what you say and about the allegations or accusations that you make and certainly you must be careful about your public conducts."

INEC's Chairman, Attairu Jega cautioning Orubebe over his conduct during the release of the Presidential election results.